Exit Fee

An exit fee (also called a redemption fee or early repayment charge) is charged by some lenders when a loan is repaid. Exit fees can apply either to early repayment before the end of the term, or to repayment at the end of the term as a final administration charge.

For bridging loans, an exit fee of 1-2% of the loan amount at redemption is common. For business loans, early repayment charges are typically expressed as a fixed number of months' interest (e.g. 'two months' interest charge for repayment in the first year'). For commercial mortgages, early repayment charges (ERCs) can be significant in the early years of the facility.

Always check the exit fee and early repayment charge schedule before taking out any finance facility, particularly if there is any possibility you might want to refinance or repay early. Ask for this information in writing before signing.

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